Forget Social, Banks Need to Customize Their Accounts

What does it take for a bank to understand its customer base? A whole lot, according to Ernst & Young, which has published one of the most exhaustive and comprehensive studies on what customers expect out of their banking relationship. In a survey of almost 30,000 banking customers in 35 different countries, the study ultimately shows that bank loyalty worldwide has been disintegrating as customers spread their wealth among multiple banks and search for the most convenient ways to access their money.

Customer loyalty isn’t what it used to be — nowadays people want to find the cheapest and most convenient banking experience. In the United States this has caused a 7 percent increase from the previous year in customers willing to switch banks as well as an equivalent decrease in those adamant on staying with their current banks. Customers in the U.S. have also been migrating away from keeping their money in a single bank in favor of opening accounts in multiple banks. Over the past year, the amount of customers with an account at only one bank has decreased from 51 percent to 42 percent and increased in those with two, three or more accounts.

An omni-channel banking world

However, perhaps even more important than the fact that customer loyalty is decreasing are the reasons. The study offhandedly references a term that Cisco has coined: the omni-channel approach to banking. As opposed to the multi-channel approach, where customers are bombarded by the many different ways to access their bank accounts, which do not necessarily coincide or complement one another, the omni-channel approach seeks to enjoin all the banking channels so that they work together harmoniously.

Cisco published an entire study just to explain and present this term only about a month ago. Now E&Y reference it as commonplace: “Move from multi-channel to omni-channel distribution: Banks need to look beyond multi-channel distribution, recognizing that customers care more about convenience than about channels.” Coupled with the data that consumers have been leaving their current banks, both partially and fully, it seems that consumers are already choosing which channels they prefer to access, whether or not banks are prepared.

Consumers prefer different channels for different banking functions, which the study only breaks down based on simple or complex transactions. But with all the different channels — branches, call centers, email, mobile apps, etc. — banks must understand which are most appropriate and when.

Banks must also understand that social networks currently are pretty much inept and any efforts to engage customers on social networks either fall short or are simply not worth reporting. Only 13 percent of customers use social networks to discover a bank’s products and services — and it goes down from there. Compare that to China, where it’s at 81 percent of customers.

Customize

The answer for banks trying to garner broad customer loyalty is not reaching out over Facebook or Twitter or even connecting with customers, it’s in personalization. Customers need to see that banks are versatile and flexible. While they search for the right bank to fulfill their needs, banks should be asking themselves, “How do we ensure that we are the ones filling those needs?” Some customers are looking for the best rates while others look for the best online experience. Still others need more products. With multiple amounts of services offered, banks must tailor them to different customer packages. Customers know what they should be paying for their experience and are willing to pay for certain extras.

Blanket debit card fees placed was a bust, but an essentially comparable fee works on the prepaid market. If a bank needs extra funds, it should increase its service and charge accordingly. In this way it will keep customers happy, while providing a fair value for its service. The omni-channel approach is more than just technology — and it is here to stay.

About Zachary Ehrlich: Zachary holds a B.A. in English from the Macaulay Honors College at Queens College, has a strong passion for writing and transparently explains relevant nuances in personal banking. Zachary has banked with CitiBank his whole life and recently opened a checking account with Capital One for its competitive rates overseas as he lived in Italy for 6 months. Follow his tweets: @ZachEhrlich